Two insurers — Allstate and American Family Insurance — announced Monday they will give back about $800 million to their auto insurance customers because people are driving far less during the coronavirus crisis.
Allstate to return $600 million in auto premiums as coronavirus cuts driving
Allstate Corp (ALL.N), one of the largest U.S. auto insurers, said on Monday it would return more than $600 million in premiums to customers as many Americans drive less due to stay-at-home orders aimed at curbing the coronavirus outbreak.
Most customers will receive a payback of 15% of their monthly premium in April and May, the company said.
The payback, which will apply to 18 million policies issued by Allstate and its Esurance and Encompass units, follows a data analysis by the insurer that showed mileage is down between 35% and 50% in most states, Allstate Chief Executive Officer Tom Wilson said during a call with reporters Monday.
The analysis, based on data that Allstate collects from tracking products that some customers agree to use in exchange for discounts, and other sources, showed no difference between states that had shelter orders in effect and those that did not, Wilson said.
Still, some people may be driving faster on what are now less densely traveled roads, which could lead to more serious accidents, Wilson said.
Allstate’s payments will go to all US and Canadian customers with personal auto insurance, whether or not their state has any kind of stay-at-home order.
American Family, which only serves customers in 19 states, also said its payments would go to all of its customers.
“American Family Insurance is doing this out of responsibility to our customers. They are driving less and experiencing fewer claims. Because of these results, they deserve premium relief,” said Telisa Yancy, American Family chief operating officer.
The premium relief will come in the form of a one-time full payment of $50 per vehicle covered by an American Family personal auto policy.
The typical American Family household with auto coverage has two vehicles, meaning the average relief check will be $100.
American Family expects to complete the printing and distribution of all 2.3 million checks within 60 days, while diligently applying social distancing practices.
The total of the partial premium refunds is expected to be $200 million.
“We are financially strong, and in a position to provide these payments to our customers at a time when it makes a meaningful difference,” ,said Telisha Yancy,American Family chief operating officer
Payments to customers in the company’s additional 18 operating states will follow after Wisconsin, pending approval from their insurance regulators.
American Family is also offering flexibility in several areas including payment deferral, payment plans, the removal of late fees, and suspending underwriting and nonrenewal cancellations.
American Family has also extended private passenger automobile coverage to food delivery drivers hired by restaurants.